WTO Agreements and Indian Agriculture: Retrospection and Prospects

By the end of 1999 World Trade Organization (WTO) will complete its five years of existence. At that time, re-negotiation on Agreement on Agriculture (AOA) will also begin. It is time to take a retrospective look at what were the expected gains for India, how was the AOA implemented, and ponder over India’s prospects in the up-coming re-negotiations. While the predictions of various macro-models about the gains to Indian agriculture and farmer were not unequivocal, their implicit assumption of perfectly competitive export markets is also questionable. Under imperfectly competitive export market structure, improvement in the terms-of-trade for Indian agriculture may be very limited. Whatever little improvement in terms-of-trade may occur, it may not have a favourable effect as agricultural supply response to changes in terms-of-trade is quite ambiguous. Moreover, the ex-post gains accruing to Indian agriculture so far seem to be very little since developed countries have used various escape routes in the WTO agreements to minimise their reform commitments. India will have to concentrate on non-price factors to improve welfare in the agricultural sector. The prospects of getting additional gains in the up-coming re-negotiations hinge on how India can take maximum advantage of the existing clauses of the AOA, and, to what extent it is successful in amending some of the clauses to its advantage. [IIM A WP]